1 a) Determine the expected value of each Gaming machine b) If the casino charge

Question

1 a) Determine the expected value of each Gaming machine b) If the casino charges $5 per play at Gaming machine 1, is the game fair? c) If the casino charges gamblers $6 per play for Gambling Machine 2, determine the expected profit or loss per play for Gambling Machine 2 d) How much should Gambling machine 1 to be fair? Gambling Machine1 Gambling Machine2 P(X) 0.3 x*P(X) 0.3 P(x) X*P(X) 0.02 0.02 0.5 0.1 0.08 0.02 0.080.16 0.3 0.32 0.1 2.02 0.1 0.3 0.5 0.3 1.5 Expected value3.98 Expected value-

Explanation / Answer

b) No game would be unfair as his expected value will be lots of $2.98 ($5-$2.02).

c) Expected loss = $6-$3.98

=$2.02

d) Gambling machine 1 should charge $ 2.02 to be fair. Since for game to be fair, expected profit/ loss need to be zero.

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